Q.(a) Explain any five principles of Insurance.

(a) Principles of insurance: utmost good faith, insurable interest, indemnity, subrogation, contribution. (b) Mercantile agents: factor, broker, commission agent, del credere agent, auctioneer.

(a) Five principles of insurance (TN HSC Class-11 Commerce syllabus):

1. Utmost Good Faith (Uberrimae Fidei) — both the insurer and the insured must disclose all material facts about the subject matter truthfully and completely.
2. Insurable Interest — the insured must have a lawful financial interest in the subject matter, so that he gains from its safety and loses from its damage/death.
3. Indemnity — insurance (except life) only compensates the actual loss suffered; the insured cannot make a profit out of a claim.
4. Subrogation — once the insurer pays the full claim for damaged property, it acquires the rights of the insured over that property or over any recovery from a third party.
5. Contribution — where the same risk is insured with more than one insurer, each insurer bears the loss only in proportion to the sum it has insured; the insured cannot recover more than the actual loss in total.

(b) Five kinds of mercantile agent (TN HSC Class-11 Commerce syllabus):

1. Factor — an agent entrusted with possession of goods, who sells them in his own name and receives payment. …